Format of Session

1. Format of Session • E-Commerce sources • What is E-Commerce • Origins of E-Commerce • E-Commerce Benefits • E-Commerce Problems • Practical

2. Internet/Electronic E-Business &c • “In five years all business will be conducted on the Internet” etc • Any company not on the internet will not be a company! • Not a question of E-Commerce - but how • Groves statement April 1999 Intel Chairman - see CD/Intel web site for exact statement • Fax example - prerequisite to doing business

3. Internet business as a timeline • Business evolution moving from an agrarian to industrial to post industrial economy • 18th/19th century - inventions such as spinning jenny revolutionised business • 20th - Distribution revolutionised business • 21st - Internet Economy - customisation for consumers requirements

4. Dynamic Trading • Service plus product - • JCB aim to do this as it gives competitive advantage see www.jcb.co.uk • Demand drives production e.g. Dell inventory level of 7 days, Dell sell only over internet • Prices matches market conditions - auction web sites see ebay.com as an example • Business chain turning into value added network

5. UK.com - how are we doing? • UK/World Facts:- • 35 years since birth of the what we now know as the Internet • Concern in recent years that UK has not yet embraced E-Commerce but recent statistics indicate that this may be changing • UK loves E-Commerce • We are the biggest users in Europe

6. Latest UK Statistics • According to the office of the e-envoy (now archived) • Web access (broadband has increased) • Online trade has increased year on year since early 2001 • Online banking usage has increased • 95% of businesses are connected

7. Main Adult Internet Usage in UK • http://www.statistics.gov.uk/cci/nugget.asp?id=8 Source: National Statistics 2008

8. Local N.Staff/S.Cheshire Facts • E-Commerce starting to take off in the local area • Lots of effort from local Chamber of Commerce, Business Link, firms offering Web services - TWF;Sentinel etc • Majority of large local firms have a web presence but not necessarily a E-Commerce presence • What is the timeframe for E-Commerce? This year, next year? - it is a strategic issue

9. What does the EU think? • “The three pillars for the success of the EU Integration are the Single Market, Monetary Union and Electronic Commerce.”Mario Monti, EU Commissioner, June 1998. • However, Europe represents a confusing picture(understatement!) • Denmark way ahead in E-Commerce, embracing the very ethos of E-Commerce - a small country maximising its world market share by the use of electronic trade frontiers • UK, Germany and France – gathering pace

10. UK Business pundits • “My conviction has increased that in Electronic Commerce we have a massive and beneficial instrument for change. The businesses that are going to survive are those that are going to adapt and change fast.” • Sir John Harvey Jones (deceased) • Other “big hitters” regularly highlighting E-Commerce • Prime Minister and E-Envoy (now defunct role) • BERR • CBI • Professional bodies such as the British Computer Society (BCS) – see Jonathan if you wish to join

11. World.com • By its very nature E-Commerce is global • World hotspots for E-Commerce are: • Hong Kong/Singapore - probably a year ahead- they now have a legislative infrastructure - these two commercial centres hold certain advantages which explain this lead • USA - very active • “Third world/Fourth”? World – more activity but watch China!

12. Buying patterns • Is there a threat posed by E-Commerce? • Research is ongoing but suggests that E-Commerce does not replace the demand for personal service - buying a pair of skis or a mountain bike • It is a matter of choice - if you know what you want or are prepared to browse the web then E-Commerce solutions attract customers • Some customers will still prefer/need to visit a store/shop physically • So can we start to define “E”

13. What is E-Commerce? • an electronic communication tool • exchange of information between: • 1. companies - business to business (extranets) • 2. companies and customers (internet) • 3. between company departments (Intranet)

14. What is not E-Commerce? • A common mistake is that firms/individuals regard a web site or web development as E-Commerce • Example Orchard Cider • It could be argued that these are just pre-requisites for E-Commerce • E-Commerce is a business issue/business policy/business model issue - not just a technical issue

15. Exchange of information B2B • supply chain : exchange of information in each stage of production (raw materials-final product) • ordering, payment, tracking • E-Commerce can streamline the procurement and payment processes making it easier for businesses to conduct their operations

16. Exchange of information B2C • electronic brochures : information about products/services • electronic retailing : selling of products/services • customisation : customer feedback permits tailor-made personalised services.

17. Exchange of information - departmental • increase of information flows between company departments • improves communication • improves customer service

18. Origins of E-Commerce • Electronic commerce (E-Commerce) did not appear with the internet! • Some firms have been exchanging “bread and butter” data i.e purchase orders, invoices etc for many years using Electronic Document Interchange(EDI) • Large manufacturing companies recognised EDI as an opportunity to seize competitive advantage very early on.

19. EDI • EDI is still the backbone of E-Commerce - the customer interface is a sexy front end • EDI traditionally costly to implement for a SME and traditionally is a batch data system - 2 - 10k • EDI usually involves tracking software

20. Impact of the Internet on EDI • Massive increase! • One of the major difficulties in implementing EDI between two companies has been getting both parties on the same network • With the Internet every company is potentially on the same network with every other company

21. EDI to E-Commerce • The internet has enabled entry level for SME’s into EDI/E-Commerce more affordable • Costs about <5k a year to run • E-Commerce solution only needs a browser and a hosted web site to get started. Payment servicing and logistics are needed as well • Companies with existing e-mail and web browser usage can quickly adjust to E-Commerce

22. E-Commerce Benefits • Huge cost savings • Growth of customer base and market share • Protection of brand, customer base and market share • Reduction of risk; low capital requirements • Increase in efficiency • Increase in profits

23. E-Commerce Benefits • Improvement in customer service and information about products/services • Feedback of vital information; allows customisation • Sharing of information (stock availability, price changes, invoice payment, delivery times,…) • Encourages change in the organisational structure and culture, necessary to survive in the networked economy

24. E-Commerce Benefits • Tax benefits - may be VAT and tax breaks - still not clear on this globally. World Trade Organisation meeting in Seattle tried to clarify this • Accessible by everyone who has Internet access • Accessible 24hrs per day, 7 days per week, 365 days of the year • Lower price feasible (at least two links in the supply chain disappear)

25. E-Commerce Benefits • Access to up-to-date information • Easy comparison of thousands of products on a single web site • No contending with traffic, parking, limited store hours, other shoppers, lugging around with heavy packages. • Elimination of fraudulent use of credit cards by sales personnel?

26. E-Commerce Problems • Company culture : lack of communication between departments : • the IT department does not understand the business opportunities of E-Commerce • the commercial department does not understand the potential of new technologies • Resistance to change business processes: • Inertia!

27. General Problems • E-Commerce priority : • UK : business to business; focus on short-term profitability • US : business to consumer; focus on long-term profitability

28. General Problems • Investments : • US : heavy, to gain competitive advantage • UK : wait to see which way the cat jumps (fear of failure of investments) • danger of missing out on huge opportunities • risk of commercial suicide • US companies: threat to UK companies • consider advantages business to consumer focus

29. Problems • E-Commerce wrongly interpreted as a technology issue rather than a business opportunity • Consumer lacks trust in security systems • Legacy integration : how integrate inherited systems with new Internet-based solutions? Adapt to old systems • How to get the goods to the customer? Adapt logistic processes

30. Problems • Brand awareness (first brand stays in customer’s mind); solve by offering Internet freebies • Keep the customer informed about the progress of their order; tracking • Import regulations and customs

31. Other issues • decrease in seduction power • customer has to know exactly what he/she wants • increase in cocooning with social and health consequences • increase in unemployment (links in supplier chain disappear)

32. E-Commerce held back? • By what - recent newspaper articles and research indicate that security is the big fear amongst consumers - fear of giving credit card details over the web • At least two problems exist in trade of any sort: • 1. Authenticity of the shopper and the vendor • 2. Security issues from the release of credit card These issues have been amplified by the web